The marketing behind luxury perfumes: What justifies the price?

First of all, you should know that there are different kinds of perfumes, fragrances. A so-called “luxury” perfume is composed of eaux de parfums or extracts. The world’s best-selling luxury perfume is… The N°5 of Chanel! This timeless scent has survived the years thanks to a brand and product image that is always up to date and modern.

Who doesn’t remember Marilyn Monroe’s mythical phrase that she only wore a few drops of Chanel N°5 to sleep.

What’s behind the price?

Nowadays, the average price of a top brand perfume is 100 €. However, in the minds of consumers this price justifies the quality of the product and the name of the brand. Let’s take a look at what’s really behind a perfume costing 100 € (incl. VAT).

1%: The concentrate of perfume essence. Yes yes, you read that right. However, the liquid is composed of a tiny percentage of perfume essence concentrate, the rest being alcohol and water.

4%: Packaging. The bottle will serve as a support for the brand and must be consistent with the spirit of the brand. The important thing is to express the fragrance through its image, its elegance.

15%: The margin that the brand makes on each fragrance.

25%: Communication. Packaging design is useless if the consumer doesn’t hear about the perfume. This budget can very quickly see the amount of communication increase if it calls on celebrities to be the muse of the perfume.

35%: Distribution fees. That is to say the distribution of the perfumes from its place of production to the different points of sale (perfumeries…).

19.6 % : VAT.

Price is an important element in the prestige of a perfume. However, if one thinks that one is buying an expensive perfume because the materials will necessarily be of quality, it is false. In reality, the price of perfume is an artificial construction, which is only justified by the need to reflect an image of luxury, and costs external to the product.

How about you buy a picture more than a scent?

The second budget for a brand is indeed advertising and marketing. Luxury brands sell a dream, a utopian image before selling a scent. No less than 400 new fragrances come out in the world every year! Consumers are considered to be real zappers. In search of new scents, new packaging and, of course, new ads. Over-consumption also affects the world of luxury. Despite a strong crisis in the advertising budget, luxury houses are once again investing massively in quality short films.

These ads are viewed thanks to celebrities, the brand’s ambassadors. The more its stars are known worldwide, the more legitimacy the brand will have as a luxury brand. It is important that the star represents the spirit of the brand, brings elegance to avoid any bad image.

The budget can be very large. But behind the image, the brand is looking for identification. Once in the store, consumers will remember the celebrity and judge it by their appreciation of that star.

Several examples can be given:

  1. The house of Dior called on Nathalie Portman, who represented the perfume Miss Dior with a 3-year, $28-million contract.
  2. Robert Pattinson for Dior Homme pocketed $12 million for 3 years.
  3. As for Brad Pitt, Chanel paid him 7 million dollars for a TV spot!

The psychological process of the consumer and the advertising influence

For luxury brands, a new fragrance launch is an investment. To make no mistake, brands will try to understand the consumer’s choice process and motivations for buying in order to influence them.

There are two types of purchasing processes:

  1. The first process corresponds to the purchase WITHOUT olfactory contact. This act of purchase was influenced upstream by advertising! One of the main reasons for this phenomenon is neuropsychological in nature. It has probably already happened to you that a perfume makes you think of memories, a scene or even sometimes a person in your entourage. Mental images play an important role in the buying behavior of a perfume. It will flatter the pre-existing psychological motivation of the individual.
  2. The second process takes place directly in the store. The consumer, which means you, will be able to see the bottle and smell the fragrance. Sometimes you don’t even have to go to the store, olfactory samples can be found in women’s magazines.

A study has shown that the higher the price of a perfume, the better the sales. For consumers, price means assured quality. You now know that for luxury brands, the final price is not necessarily a guarantee of quality, but more often an effort to differentiate through marketing and communication.